What could be the impact of a proposed ban on upward-only Commercial rent reviews?

The UK government’s English Devolution and Community Empowerment Bill introduces a proposed ban on upward-only rent reviews (UORRs) in new commercial leases, a reform that could reshape the property market.

UORRs, which prevent rents from falling during reviews, will be prohibited, meaning rents must now be allowed to move in both directions in line with market conditions.

I see clear potential benefits for tenants, particularly smaller retailers.

Many independents have struggled with rigid rent structures, and greater flexibility could help relieve pressure and support the revival of high streets.

However, with short-term, flexible leases becoming increasingly common in the retail sector, it remains to be seen whether the Bill will have a significant impact on terms agreed.

For landlords, the change introduces a real element of uncertainty. The loss of guaranteed upward-only rents may weaken income predictability, affect valuations, and dampen confidence in funding new developments.

My expectation is that landlords will adapt by shifting towards alternatives such as stepped or index-linked rents, though these could, in practice, leave tenants worse off.

In the industrial and logistics markets, the immediate impact is likely to be more limited. Demand remains strong and rents are generally less volatile, but lease structures and investment models will need careful review to account for the potential loss of upward-only rent certainty.

The office sector could see a more significant shift, as occupiers, particularly SMEs, gain more negotiating power at a time of changing workplace demand.

Overall, while the ban could improve flexibility for tenants, it introduces challenges for landlords and investors.

Striking a fair balance between tenant flexibility and landlord predictability will be critical to maintaining a stable and effective commercial property market.

For more advice on this issue, please contact Katie Bates, Commercial Surveyor, in our Norwich office on 01603 629871 or email katie.bates@brown-co.com

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